PUC closes book on failed regional desal project

After years of controversy and tens of millions of dollars, the Regional Water Project is officially dead.

On Wednesday, the state Public Utilities Commission issued a final decision allowing California American Water to withdraw from the regional desalination project and closing the proceeding.

The commission unanimously approved formally shutting down the project last week.

In its final decision, the commission ruled that uncertainty about crucial issues involving the project's environmental review, financing and permitting made it unreasonable to force Cal Am to proceed with the project.

The decision declared Cal Am would be required to file a new application to address unresolved project costs. Cal Am and its former project partners — the Monterey County Water Resources Agency and the Marina Coast Water District — spent about $40 million on the project and haven't reached an agreement about who will pay.

Cal Am, which has sought permission to recover about $32 million in pre-project costs, has been approved for about $26.6 million. It has collected about $14.4 million from customers.

The $400 million project would have included a desal plant north of Marina owned and operated by Marina Coast, drawing brackish water from county-controlled shoreline wells to be pumped to Cal Am's customers. The project was meant as a replacement source of water to offset a state-ordered cutback in pumping from the Carmel River set to take effect by the end of 2016.

Cal Am has since applied for a new water-supply project that combines a similar desal plant with supplemental aquifer storage and recovery and groundwater replenishment sources.